Exhibit
10.16


 


COMMUTATION AND RELEASE AGREEMENT


 


This Commutation and
Release Agreement (this “Agreement”), dated as of April 28, 2004,
as made by and between WESTCHESTER FIRE INSURANCE COMPANY (the “Company”)
and ASSURED GUARANTY RE OVERSEAS LTD. (formerly ACE Capital Re Overseas Ltd.) (the “Reinsurer”).


 


WHEREAS, the parties
hereto have entered into that that certain (i) Reinsurance Agreement, effective
as of January 1, 2001, between the Company and the Reinsurer and attached
hereto as Exhibit A and (ii) Facultative Certificate (No. 2001-1) evidencing an
Intercompany Facultative Reinsurance pursuant to Reinsurance Agreement,
effective as of January 1, 2001, between the Company and the Reinsurer and
attached hereto as Exhibit B (collectively, the “Reinsurance Agreement”);


 


WHEREAS, the parties
hereto desire fully and finally to settle and commute all of their respective
past, present and future right, title, interest and obligations in, to and
under the Reinsurer Agreement.


 


NOW THEREFORE, in
consideration of the premises and the mutual covenants herein contained, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:


 


Section 1.  Commutation Payment.     On
May 3, 2004, the Reinsurer shall transfer to the Company, in accordance with
the written instructions of the Company, the assets identified on
Schedule 1 hereto.


 


Section 2.  Mutual Release.     (a)     Upon
transfer of the assets identified in Section 1 hereof and effective as of
May 1, 2004, the Company hereby irrevocably and fully and finally releases the
Reinsurer (and its predecessors, parents, affiliates, agents, officers,
directors, shareholders, successors and assigns) from any and all of its past,
present and future right, title, interest and obligations in, to and under the
Reinsurance Agreement (of any nature whatsoever, whether now existing,
hereafter arising or contingent or whether known or unknown), it being the
intention of the parties that this release operate as a full and final
settlement of any and all current and future obligations and liabilities of the
Reinsurer to the Company under the Reinsurance Agreement.


 


(b)     Subject
to the release by the Company of the Reinsurer as provided in Section 2(a)
above and effective as of May 1, 2004, the Reinsurer hereby irrevocably and
fully and finally releases the Company (and its predecessors, parents,
affiliates, agents, officers, directors, shareholders, successors and assigns)
from any and all of its past, present and future right, title, interest and
obligations in, to and under the Reinsurance Agreement (of any nature
whatsoever, whether now existing, hereafter arising or contingent or whether
known or unknown), it being the intention of the parties that this release
operate as a full and final settlement of any and all current and future
obligations and liabilities of the Company under the Reinsurer Agreement.


 


Section 3.  Successors and Assigns.     The
rights, duties and obligations set forth herein shall inure to the benefit of
and be binding upon any and all predecessors, successors, affiliates, officers,
directors, employees, parents, subsidiaries, stockholders, liquidators,
receivers and assigns of the parties hereto.


 
















 


Section 4.  Representations.     Each
of the parties hereto represents and warrants that: (a) it is a corporation in
good standing in its place of domicile; (b) the execution of this Agreement by
it is fully authorized; (c) the person executing this Agreement on behalf of it
has the necessary and appropriate authority to do so; and (d) there are no
pending agreements, transactions or negotiations to which it is a party that
would render this Agreement or any part hereof void, voidable or unenforceable.


 


Section 5.  Entire Agreement.     This
Agreement contains the entire agreement between the parties respecting the
subject matter hereof and supersedes all oral statements and prior writings
with respect thereto.


 


Section 6.  Further Assurances.     Each
party hereto shall, at any time and from time to time after the first date
written above, upon request of any other party hereto, do, execute, acknowledge
and deliver, or cause to be done, executed, acknowledged and delivered, all
such further acts, instruments, assignments and assurances as may be reasonably
required in order to carry out the intent of this Agreement.


 


Section 7.  Governing Law.     This
Agreement shall be governed by New York law, without regard to its conflict of
laws doctrine.


 


Section 8.  Amendment; Waiver.     This
Agreement may be terminated, modified or amended only by a writing signed by
each of the parties.  Any term of this
Agreement may be waived by the party that is entitled to the benefit thereof.  Any waiver shall be in writing and shall be
executed by an executive officer of the party granting the waiver.


 


Section 9.  Counterparts.     This
Agreement may be executed in any number or counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.


 


[The next page is the signature page.]


 


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IN WITNESS WHEREOF, this
Agreement has been executed by a duly authorized officer of each of the parties
as of the date first above written.


 


 


	
  ASSURED GUARANTY RE
  OVERSEAS LTD.

  
	
   

  
	
  By:

  	
  /s/ Pauletle Hurst

  	
   

  
	
   

  	
  Name: Pauletle Hurst

  
	
   

  	
  Title: Assistant
  Secretary

  
	
   

  
	
   

  
	
  WESTCHESTER FIRE
  INSURANCE COMPANY

  
	
   

  
	
  By:

  	
  /s/ Francis W.
  McDonnell

  	
   

  
	
   

  	
  Name: Francis W.
  McDonnell

  
	
   

  	
  Title: Treasurer

  



 


 


Chase Commutation
Agreement


 
















 


Exhibit
A


 


REINSURANCE
AGREEMENT


 


Effective:  January 1, 2001


 


between


 


Westchester Fire
Insurance Company


New York, New York


(the “Company”)


 


and


 


ACE
Capital Re Overseas Ltd.


Hamilton, Bermuda


(the “Reinsurer”)


 


Preamble


 


Whereas,
the Reinsurer will be assuming facultative reinsurance from the Company on
lines of business for which the Company is duly licensed under
Section 1113 and Section 4102(c) of the Insurance Laws of the State
of New York; and


 


Whereas,
by this Agreement, the Company wishes to cede to the Reinsurer and the
Reinsurer is willing to assume reinsurance on a facultative basis on certain
Policies to be underwritten by the Company, in an amount and limit to be
determined on a policy-by-policy basis; and


 


Whereas, the Reinsurer and the
Company intend to execute and deliver all of the Facultative Certificates in
accordance with terms and conditions of this Agreement.


 


Now
Therefore, in consideration of the mutual covenants
hereinafter contained and upon the terms and conditions hereinafter set forth,
the Company and Reinsurer agree as follows:


 


Article I - Intercompany Facultative Reinsurance


 


1.1  The Company hereby cedes as reinsurance to
the Reinsurer and the Reinsurer hereby accepts as reinsurance from the Company
the share of each Policy that is specified and agreed to by the parties in a
Facultative Certificate (such reinsurance is referred to individually and
collectively herein as “Intercompany Facultative Reinsurance”).  The terms of each Intercompany Facultative
Reinsurance (including, without limitation, the premium, retention and limits
thereof) will be determined by the Company and the Reinsurer on a
policy-by-policy basis and evidenced by a duly executed Facultative Certificate
between the Reinsurer and the Company. 
In all cases, Company and Reinsurer hereby acknowledge that a full-time
employee or officer of Company will retain final decision making authority with
respect to all reinsurance ceded hereunder.


 


1.2  On each Intercompany
Facultative Reinsurance, the Reinsurer agrees to reimburse the Company for its
share of the following:


 
















 


1.2.1                        All Loss
payments made by the Company on the Policy ceded pursuant to such Intercompany
Facultative Reinsurance; and


 


1.2.2                        Allocated
Loss Expense with respect to such Policy.


 


1.3  Subject to the terms,
conditions and limitations of this Agreement, the Intercompany Facultative
Reinsurance provided with respect to a Policy ceded hereunder shall be in
effect concurrently with such Policy, unless otherwise provided in the
Facultative Certificate relating to such Policy.  To the extent of its interest, the Reinsurer
shall follow the fortunes of the Company in all matters coming within the scope
of this Agreement, which shall be liberally construed.


 


Article II - Commencement and Termination


 


2.1  This Agreement shall be
effective as of the date hereof and shall remain in effect unless terminated in
accordance with this Article.


 


2.2  Either party to this
Agreement may elect to terminate its participation in this Agreement on thirty
(30) days’ prior written notice to the other party.


 


2.3  Notwithstanding any other provision of this
Agreement, any party may terminate this Agreement immediately upon written
notice to the other party in the event that the other party (i) becomes
insolvent or bankrupt, or admits in writing its inability to pay its debts as
they become due, or makes an assignment for the benefit of creditors, or
applies for or consents to the appointment of a trustee or receiver for the
major part of its property; (ii) becomes the subject of bankruptcy,
reorganization, rearrangements, insolvency or liquidation proceedings, or other
proceedings for relief of creditors and such proceedings are not stayed or
discharged within ninety (90) days after being commenced; (iii) is
acquired by another entity, unless such acquiring entity is wholly owned,
directly or indirectly, by ACE Limited; (iv) fails to obtain or maintain
any licenses, permits or other qualifications that are required by law to
fulfill its obligations under this Agreement and such failure remains uncured
after fifteen (15) days; or (v) commits abandonment, fraud or willful
misconduct in connection with the provision of services under this Agreement.


 


2.4  Termination of this
Agreement shall not relieve either party of its obligations under this
Agreement up to the effective date of termination.  Further, termination of this Agreement shall
not relieve either party of its obligations with respect to Policies ceded
hereunder prior to the effective date of termination of this Agreement.


 


2.5  Notwithstanding the
foregoing, if any law or regulation of the Federal or State or Local Government
of any jurisdiction in which the Company or Reinsurer is doing business should
render the enforcement of this Agreement, in whole or in part, illegal within a
given jurisdiction, the affected party may, upon written notice to the other
party, suspend, abrogate, or amend this Agreement insofar as it applies to such
jurisdiction, to the extent necessary to comply with such law or regulation.  Such cancellation, suspension, abrogation or
amendment of this Agreement shall in no way affect any other portion thereof.


 


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Article III - Other Reinsurance


 


The Company is permitted,
but not required, to purchase facultative and/or treaty reinsurance on business
subject to this Agreement.


 


Article IV - Definitions


 


The following
terms have the respective meanings set forth below.  Other terms are defined elsewhere in this
Agreement.


 


4.1  “Allocated Loss Expense” means expenses
allocable to the investigation, defense, resistance to and/or settlement of
claims and losses, including litigation expenses, interest on judgments and
legal expenses incurred in connection with coverage questions and legal
actions, including declaratory judgment actions, connected thereto, but
excluding the normal office expenses and salary charges of regular employees or
officials of the Company except in the case of claim adjusters or staff
attorneys, and then only when the time spent and any expenses of the adjuster
or staff attorney is definitely allocable to a specific claim.


 


4.2  “Company” means
Westchester Fire Insurance Company, a New York domesticated insurance company.


 


4.3  “Effective Date” means
the date this Agreement took effect as designated in the title on Page 1.


 


4.4  “Facultative Certificate” means the
certificate to be executed and delivered by the Reinsurer and the Company to
evidence each Intercompany Facultative Reinsurance, which certificate shall be
substantially in the form of Exhibit “A” hereto.


 


4.5  “Loss” and “Losses” means the amount paid by
the Company or for which the Company has become liable to pay for any claim,
settlement, award, or judgment under a Policy ceded hereunder, after making
deductions for all recoveries, salvages and subrogations actually collected,
and inuring reinsurance, whether collected or not.


 


4.6  “Policy” and “Policies”
mean any policies, contracts, binders of insurance or reinsurance issued or
renewed by the Company.


 


4.7  “Reinsurer” means ACE
Capital Re Overseas Ltd., a Bermuda insurance company.


 


4.8  “Required Amount” means
the market value of assets the Reinsurer is required to maintain in the Trust
Account to satisfy purposes (a) through (c) in Section 11.8.


 


Article V - Claims and Loss Adjustment Expenses


 


5.1  In the event of a Loss
which in the Company’s opinion is likely to give rise to a claim under a
Facultative Certificate, notice thereof shall be given to the Reinsurer.


 


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5.2  The Company will be the
sole judge as to what constitutes a claim or loss covered under the Policies
ceded hereunder and as to the Company’s liabilities thereunder.  The Company shall, at its sole discretion,
adjust, investigate, settle, compromise or defend all claims and losses.  All loss settlements made by the Company
shall be binding upon the Reinsurer, and amounts falling to the share of the
Reinsurer shall be payable by it upon reasonable evidence of the amount paid or
to be paid being given by the Company.


 


5.3  When requested by the
Reinsurer, the Company shall permit the Reinsurer, at the expense of the
Reinsurer, to be associated with the Company in the defense of any claim, loss,
or legal proceeding which involves, or is likely to involve, the Reinsurer.


 


Article VI - Salvage and Subrogation


 


6.1  The Company hereby
agrees to enforce its rights to salvage or subrogation relating to any loss, a
part of which loss was sustained by the Reinsurer, and to prosecute all claims
arising out of such rights.  In the event
the Company shall refuse or neglect to enforce its rights to salvage or
subrogation, the Reinsurer is authorized and empowered to bring any appropriate
action in the name of the Company or its policyholder or otherwise to enforce
those rights, and the Company shall cooperate fully
with the Reinsurer in its efforts to enforce those rights.


 


6.2  The Company and the
Reinsurer shall share in the cost and expense of any unsuccessful salvage or
subrogation efforts in the same proportion that the Company and the Reinsurer
shared in the loss giving rise to those salvage or subrogation efforts.


 


6.3  The Reinsurer shall be
credited with subrogation and salvage (i.e., reimbursement obtained or recovery
made by the Company, less the actual cost, excluding salaries of officials and
employees of the Company and sums paid to attorneys as retainer, of obtaining
such reimbursement or making such recovery) on account of claims and
settlements involving reinsurance hereunder. 
With respect to all excess of loss Intercompany Facultative Reinsurance,
subrogation and salvage shall be used to reimburse the Reinsurer for its
portion of the loss before being used to reimburse the Company for its portion
of the loss under its retention.  With
respect to all proportional Intercompany Facultative Reinsurance, subrogation
and salvage shall be shared between the Company and the Reinsurer in accordance
with their proportionate shares.


 


Article VII - Original Conditions


 


7.1  Except as otherwise
provided in a Facultative Certificate, all Intercompany Facultative Reinsurance
under this Agreement shall be subject to the same rates, terms, conditions and
waivers, and to the same modifications and alterations, as the respective
Policies of the Company.


 


7.2  Nothing herein shall in
any manner create any obligations or establish any rights against the Reinsurer
in favor of any third party or any persons not parties to this Agreement.


 


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Article VIII - Reports and Remittances


 


Within thirty (30) days
of the last day of each quarter, the Company shall provide the Reinsurer with
such reports as are specified in the Facultative Certificates.


 


Losses payable under any
Intercompany Facultative Reinsurance shall be paid within the time period
specified in the applicable Facultative Certificate.


 


Article IX - Access to Books and Records


 


9.1  The Company and the
Reinsurer and their respective duly authorized representatives shall, at all
reasonable times, each be permitted access to all books and records of the
other pertaining to the Intercompany Facultative Reinsurance which is issued
pursuant to the provisions of this Agreement.


 


9.2  Reinsurer shall keep, in
a manner and form approved by Company, accurate and complete books of account,
records and files, in either written or electronic form, of all business
conducted under and pursuant to this Agreement (the “Books and Records”).


 


9.3  Reinsurer and Company
shall make all of the Books and Records available to the other for examination
and inspection by duly authorized representatives of Company or Reinsurer, upon
reasonable notice, at any time during ordinary business hours.


 


9.4  Company shall make all
of the Books and Records available for examination and inspection by the
Superintendent of Insurance of the State of New York or his duly authorized
representatives, upon reasonable notice, at any time during ordinary business
hours.


 


9.5  The Company and
Reinsurer hereby acknowledge that nothing in this Agreement is intended to
change, diminish or in any way modify its commitments which the Company made to
the New York Insurance Department in connection with its acquisition by ACE
Limited, as set forth in letters dated November 14, 1997, December 5,
1997 and December 23, 1997.


 


Article X - Regulatory Matters


 


10.1  No services shall be
provided under this Agreement unless the entity or natural person who performs
such services possesses all licenses, permits and other qualifications that are
required by law to perform such services.


 


Article XI - Security


 


11.1  The Reinsurer may enter
into a trust agreement with the Company (the “Trust Agreement”) and a Qualified
United States Financial Institution (the “Trustee”) in a form acceptable to the
Company and establish a trust account (the “Trust Account”) for the benefit of
the Company with respect to the liabilities assumed by the Reinsurer
hereunder.  The Trust


 


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Agreement shall be in
strict compliance with the terms of Regulation 114 promulgated pursuant to the
New York Insurance Laws.


 


11.2  The Reinsurer agrees to
deposit and maintain in said Trust Account assets to be held in trust by the
Trustee for the benefit of the Company as security for the payment of the
Reinsurer’s obligations to the Company under this Agreement, as specified in
Section 11.8 of this Agreement. 
Such assets shall be maintained in the Trust Account by the Reinsurer as
long as the Reinsurer continues to remain liable for any Policy ceded hereunder
as provided in Section 2.4 of this Agreement.


 


11.3  The Reinsurer agrees that the assets so
deposited shall consist only of cash (United States legal tender), certificates
of deposit (issued by a United States Bank and payable in United States legal
tender), and investments of the types permitted by the New York Insurance Law
or any combination of the previously mentioned.


 


11.4  The Reinsurer, prior to
depositing assets with the Trustee, shall execute all assignments, endorsements
in blank, and transfer legal title to the Trustee of all shares, obligations or
any other assets requiring assignments, in order that the Company, or the
Trustee upon direction of the Company, may whenever necessary negotiate any
such assets without consent or signature from the Reinsurer or any other
entity.


 


11.5  The Reinsurer shall
deposit into the Trust Account an amount sufficient to cover the Reinsurer’s
obligations to the Company as set forth in Section 11.8 of this Agreement.


 


11.6  At the end of each
quarter, the Company shall determine if the Trust Account is adequately funded
with respect to the Company’s liabilities reinsured hereunder.  If the Company determines that the Trust
Account is not adequately funded, i.e., the Trust Account contains less
than the Required Amount, the Company shall send the Reinsurer a notice
specifying the amount of the inadequacy and the Reinsurer shall deposit such
amount in the Trust Account within thirty (30) days of receipt of such notice.


 


11.7  All settlements of
account under the Trust Agreement between the Company and the Reinsurer shall
be made in cash or its equivalent.


 


11.8  The Company and the Reinsurer agree that the
assets in the Trust Account may be withdrawn by the Company at any time,
notwithstanding any other provision in this Agreement, provided such assets are
applied and utilized by the Company or any successor of the Company by
operation of law, including, without limitation, any liquidator, rehabilitator,
receiver or conservator of the Company, without diminution because of the
insolvency of the Company or the Reinsurer, only for the following purposes:


 


(a)                                  to reimburse the Company for the Reinsurer’s share of any
Losses paid by the Company with respect to Policies reinsured hereunder, if not
otherwise paid by the Reinsurer;


 


(b)                                 to fund an account with the Company in an amount at least
equal to the deduction, for reinsurance retroceded, from the Company’s
liabilities with respect to Policies


 


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reinsured
hereunder.  Such account shall include,
but not be limited to, amounts for policy reserves, claims and losses incurred
(including losses incurred but not reported), and unearned premium reserves;
and


 


(c)                                  to pay any other amount the Company claims are due under
this Agreement.


 


11.9  The Reinsurer shall have the right to seek
the Company’s approval to withdraw all or any part of the assets from the Trust
Account and transfer such assets to the Reinsurer, provided that:


 


(a)                                  the
Reinsurer shall, at the time of withdrawal, replace the withdrawn assets with
other assets of a type permitted hereunder having a market value equal to the
market value of the assets withdrawn, so as to maintain the Trust Account in
the Required Amount, or


 


(b)                                 after such withdrawal and transfer, the market value of the Trust
Account is no less than 102% of the Required Amount.


 


In the event that the
Reinsurer seeks the Company’s approval hereunder, the Company shall not
unreasonably or arbitrarily withhold its approval.


 


11.10  In the event that the
Company withdraws assets from the Trust Account for the purposes set forth in
Section 11.8 (a) or (b) in excess of actual amounts required to meet the
Reinsurer’s obligations to the Company, or in excess of amounts determined to
be due under Section 11.8 (c), the Company will return such excess to the
Reinsurer, plus interest at the prime (or base) rate of interest.  In the event of a dispute arising under this
Article XI, the arbitration panel established pursuant to Article XIII
of this Agreement shall have the right to award interest at a rate that is
determined to be equitable, and may award attorney’s fees, arbitration costs
and other expenses.


 


11.11  At the option of the
Reinsurer, letters of credit meeting the requirements of New York Insurance
Regulation 133 (“Letters of Credit” or, in the singular, “Letter of Credit”)
may be substituted in whole or in part for the Trust Account.  Any such Letter of Credit will be procured
from a Qualified United States Financial Institution, and may be drawn down at
any time by the Company, only for the purposes set forth in Section 11.8
(a), (b) or (c) of this Agreement, without diminution because of the insolvency
of the Company or the Reinsurer.  If the
Company receives notification of nonrenewal of a Letter of Credit and if
Reinsurer’s entire obligations under this Agreement remain unliquidated and
undischarged ten (10) days prior to such expiration date, the Company may
obtain a cash deposit equal to such obligations, without diminution because of
the insolvency of the Company or Reinsurer, and deposit such amount in the name
of the Reinsurer in any United States bank or trust company, apart from its
general assets, in trust for such uses and purposes as specified in
Section 11.8 of this Agreement.  If
the Letter of Credit is drawn down, the provisions of section 11.8 shall
apply to the amount so drawn and the Company shall immediately return to
Reinsurer any amounts drawn down on the Letter of Credit that are subsequently
determined not to be due.


 


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11.12  If Letters of Credit are
substituted in whole or in part for the Trust Account, as permitted by
Section 11.11 of this Agreement, there shall be an adjustment after
receipt of each quarterly report to ensure that the collective security
provided by the Trust Account and any such Letters of Credit is equal to (but
not greater or less than) the Required Amount. 
If such collective security is determined to be less than the Required
Amount, the Reinsurer, shall, within thirty (30) days after receipt of notice
of such excess, secure delivery to the Company of an amendment of the Letter of
Credit or additional Letters of Credit, increasing the amount of credit by the
amount of such deficiency.  If such
collective security is determined to be more than the Required Amount, the
Company shall, within thirty (30) days after receipt of a written request from
the Reinsurer, release such excess credit by consenting to an amendment to the
Letter or Letters of Credit, reducing the amount of credit available by the
amount of such excess credit.


 


11.13  The issuing bank will have no responsibility
whatsoever in connection with the propriety of withdrawals made by the Company
or the disposition of funds withdrawn, except to ensure that withdrawals are
made only upon the order of properly authorized representatives of the Company.


 


Article XII - Insolvency


 


12.1  In the event of insolvency of the Company,
payments under this Intercompany Facultative Reinsurance shall be made by the
Reinsurer immediately upon demand to the conservator, liquidator, receiver or
statutory successor of the Company, or to such other person as shall be legally
responsible or entitled to receive such payments, on the basis of the liability
of the Company under any Policy ceded hereunder, without diminution because of
the insolvency of the Company or because such conservator, liquidator, receiver
or statutory successor has failed to pay all or a portion of any claims.  The foregoing sentence shall not apply to any
Intercompany Facultative Reinsurance the Facultative Certificate for which
specifies another payee in the event of the insolvency of the Company.  In the event of the Company’s insolvency, the
conservator, liquidator, receiver, or statutory successor of the Company shall
give the Reinsurer written notice of the pendency of any claim against the
Company involving a Policy ceded hereunder within a reasonable time after such
claim is filed in the insolvency proceeding, and during the pendency of such
claim, the Reinsurer may investigate such claim and interpose, at its own
expense, in the proceeding where the claim is to be adjudicated any defense or
defenses which it may deem available to the Company or its conservator,
liquidator, receiver or statutory successor. 
Subject to court approval, the expense thus incurred by the Reinsurer
shall be chargeable against the Company as part of the expense of liquidation
to the extent of a proportionate share of the benefit which may accrue to the
Company solely as a result of the defense undertaken by the Reinsurer.


 


Article XIII - Arbitration


 


13.1  Any dispute or difference arising with
reference to the applicable interpretation or effect of this Agreement or any
Intercompany Facultative Reinsurance, or any part thereof, shall be referred to
a Board of Arbitration (the “Board”) of two (2) arbitrators and an umpire.


 


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13.2  The members of the Board
shall be active or retired disinterested officers of insurance or reinsurance
companies.  One arbitrator shall be
chosen by the party initiating the arbitration and designated in the letter
requesting arbitration.  The other party
shall respond, within thirty (30) days, advising of its arbitrator.  The umpire shall thereafter be chosen by the
two (2) arbitrators.


 


13.3  In the event either
party fails to designate its arbitrator as indicated above, the other party is
hereby authorized and empowered to name the second arbitrator, and the party
which failed to designate its arbitrator shall be deemed to have waived its
right to designate an arbitrator and shall not be aggrieved thereby.  The two (2) arbitrators shall then have
thirty (30) days within which to choose an umpire.  If they are unable to do so, the umpire shall
be chosen by the manager of the American Arbitration Association who shall be a
person meeting the qualifications set forth above.  Each party shall submit its case to the Board
within one (1) month from the date of the appointment of the umpire, but this
period of time may be extended by unanimous written consent of the Board.


 


13.4  The sittings of the
Board shall take place in New York, New York, unless otherwise agreed in
writing by the parties.  The Board shall
make its decision with regard to the custom and usage of the insurance and
reinsurance business.  The Board is
released from all judicial formalities and may abstain from the strict rules of
law.  The written decision of a majority
of the Board shall be rendered within sixty (60) days following the termination
of the Board’s hearings, unless the parties consent to an extension.  Such majority decision of the Board shall be
final and binding upon the parties both as to law and fact, and may not be
appealed to any court of any jurisdiction. 
Judgment may be entered upon the final decision of the Board in any
court of proper jurisdiction.


 


13.5  Each party shall bear
the fees and expenses of the arbitrator selected by or on its behalf, and the
parties shall bear the fees and expenses of the umpire as determined by the
Board.


 


13.6  The arbitration section of this
Agreement shall survive termination of this Agreement and be deemed to be an
obligation of the parties which is independent of, and without regard to, the
validity of this Agreement.


 


Article XIV - Severability


 


14.1  In the event any
provision of this Agreement shall be held invalid or unenforceable by a court
of competent jurisdiction, such holding shall not invalidate or render
unenforceable any other provision of this Agreement.


 


Article XV – Offset


 


15.1  The Company and the Reinsurer may offset any
balance(s) or other amount(s) due from one party to the other under this
Agreement or any other reinsurance agreement heretofore or hereafter entered
into between the Company and the Reinsurer, whether acting as assuming reinsurer
or ceding company; provided, however, that in the event of the insolvency of a
party hereto, offsets shall only be allowed in accordance with the provisions
of Section 7427 of the Insurance Law of the State of New York.


 


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Article XVI – Miscellaneous


 


16.1  This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. 
Neither this Agreement nor any right hereunder may be assigned by any
party without the prior written consent of the other party affected thereby.


 


16.2  This Agreement has been
made pursuant to, and shall be governed by and construed in accordance with,
the laws of the State of New York without regard to conflicts of laws doctrine.


 


16.3  This Agreement (and any
written amendments to it) constitutes the entire agreement between the parties
and supersedes all prior agreements and understandings, oral or written,
relating to the subject matter hereof.


 


16.4  This Agreement may be
executed in multiple counterparts, each of which shall be deemed an original
for all purposes and all of which shall be deemed, collectively, one and the
same instrument and agreement.


 


10
















 


IN
WITNESS WHEREOF, this Agreement is hereby executed by duly authorized officers
of the parties hereto as of the date first above written.


 


	
   

  	
  WESTCHESTER FIRE
  INSURANCE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert E. Omahne

  	
   

  
	
   

  	
   

  	
  Name: Robert E. Omahne

  
	
   

  	
   

  	
  Title: Attorney in Fact

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ACE CAPITAL RE OVERSEAS
  LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rebecca L. Carne

  	
   

  
	
   

  	
   

  	
  Name: Rebecca L. Carne

  
	
   

  	
   

  	
  Title: Director

  
					



 


11
















 


Exhibit
B


 


FACULTATIVE
CERTIFICATE


 


EVIDENCING AN


 


INTERCOMPANY
FACULTATIVE REINSURANCE


 


PURSUANT TO


 


REINSURANCE
AGREEMENT EFFECTIVE JANUARY 1, 2001


 


BETWEEN


 


WESTCHESTER FIRE
INSURANCE COMPANY (THE “COMPANY”)


 


AND


 


ACE CAPITAL RE
OVERSEAS LTD. (THE “REINSURER”)


 


	
  Facultative Certificate Number:

  	
   

  	
  2001-1

  
	
   

  	
   

  	
   

  
	
  Original Insured:

  	
   

  	
  Chase Manhattan Automotive
  Finance Corporation

  900 Stewart Avenue

  Garden City, New York 11530

  
	
   

  	
   

  	
   

  
	
  Covered Policy:

  	
   

  	
  Residual Value Insurance Policy
  effective as of December 31, 2000 issued by the Company to the Original
  Insured, a copy of which is attached hereto as Exhibit A.

  
	
   

  	
   

  	
   

  
	
  Effective Date of Reinsurance
  (if different from Covered Policy):

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Expiration Date of Reinsurance
  (if different from Covered Policy)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Reinsurance Premium:

  	
   

  	
  $84,000,000, payable up
  front.  The premium is net of the
  Reinsurer’s share of all taxes and brokerage.

  
	
   

  	
   

  	
   

  
	
  Ceding Commission:

  	
   

  	
  None.

  
	
   

  	
   

  	
   

  
	
  Form of Reinsurance (QS or
  EOL):

  	
   

  	
  Quota share.  For the avoidance of doubt, the Reinsurer
  is liable for the Reinsurer’s Quota Share Percentage of the Profit Share
  Amount (if any), as well as the Reinsurer’s Quota Share Percentage of Covered
  Losses (subject, in the case of Covered Losses, to the Reinsurer’s Limit of
  Liability).

  



 
















 


	
  Reinsurer’s Quota Share
  Percentage (if applicable):

  	
   

  	
  75%.

  
	
   

  	
   

  	
   

  
	
  Reinsurer’s Attachment Point
  (if applicable):

  	
   

  	
  Covered Losses equal to $280
  million.

  
	
   

  	
   

  	
   

  
	
  Reinsurer’s Limit of Liability
  (if applicable):

  	
   

  	
  Covered Losses equal to $165
  million.

  
	
   

  	
   

  	
   

  
	
  Location of Risk (if different
  from Covered Policy):

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Deviations from coverage
  provided under Covered Policy:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Reports and Loss Payments:

  	
   

  	
  The Company will promptly
  provide to the Reinsurer copies of all reports received pursuant to the terms
  of the Covered Policy.  Covered Losses
  and Profit Share Amounts payable by the Reinsurer hereunder shall be paid to
  or at the direction of the Company no later than the date such amounts are
  payable by the Company to the Original Insured.  The Reinsurer shall pay Allocated Loss
  Expenses promptly following receipt of an invoice therefor.

  
	
   

  	
   

  	
   

  
	
  Other Terms:

  	
   

  	
  The Company shall not amend the
  Covered Policy without the prior written consent of the Reinsurer.

  



 


The cession evidenced by this
Facultative Certificate shall be subject to all the terms and conditions
contained in the Reinsurance Agreement referenced above.


 


	
  Signed at New York, New York, on behalf of

  Westchester Fire Insurance Company

  	
  Counter-Signed at Hamilton, Bermuda, on

  behalf of ACE Capital Re Overseas Ltd.

  
	
   

  	
   

  
	
  By:

  	
  By:

  
	
   

  	
   

  
	
   

  	
   

  
	
  Robert E. Omahne

  	
   

  	
  /s/ Rebecca  L. Carne

  	
   

  
	
  Authorized Representative

  	
  Authorized Representative

  
	
   

  	
   

  
	
  Date: August 27, 2001

  	
  Date: August 23, 2001

  
				



 


2
















 


Exhibit
A


 





 


WESTCHESTER
FIRE INSURANCE COMPANY


1133
Avenue of the Americas


New
York, New York 10036


This
Policy is issued by the stock insurance company listed above (herein
“Insurer”).


 


FREE
TRADE ZONE


 


NOTICE:
THESE POLICY FORMS AND THE APPLICABLE RATES ARE EXEMPT
FROM THE FILING REQUIREMENTS OF THE NEW YORK STATE INSURANCE DEPARTMENT.  HOWEVER, SUCH FORMS AND RATES MUST MEET THE
MINIMUM STANDARDS OF THE NEW YORK INSURANCE LAW AND REGULATIONS.


 


DECLARATIONS


 


	
  Policy No.

  	
  CRS D3 407305 3

  
	
   

  	
   

  
	
  Item 1.

  	
  Insured:  Chase Manhattan Automotive Finance
  Corporation Address:  900 Stewart
  Avenue, Garden City, New York, 11530

  
	
   

  	
   

  
	
  Item 2.

  	
  Policy
  Period: From 11:59 p.m. on December 31, 2000 until the Final Payment
  Date.

  (Local
  time at the address shown in Item 1)

  
	
   

  	
   

  
	
  Item 3.

  	
  Limit of
  Liability:  $220 million in the
  absolute aggregate excess of $280 million.

  
	
   

  	
   

  
	
  Item 4.

  	
  Policy Premium:  $121,000,000

  
	
   

  	
   

  
	
  Item 5.

  	
  Endorsements
  to the General Conditions and Limitations Effective at Inception: N/A

  
			



 
















 


IN
WITNESS WHEREOF, the Insurer has caused this Policy to be signed by its
President and Secretary and countersigned by a duly authorized representative
of the Insurer.


 


 


	
  

  	
   

  	
  

  



 


 


	
  POLICY ISSUANCE DATE:

  	
   02/05/01

  	
   

  
	
   

  
	
   

  
	 
	
   

  	
  /s/ Robert E. Omahne

  	
   

  	 

	 
	
   

  	
  AUTHORIZED REPRESENTATIVE

  	 

	 
	
   

  	
  Attorney in Fact

  	 

						



 


2
















 





 


RESIDUAL VALUE
INSURANCE POLICY


 


In consideration of the
payment of the Premium (as defined below) and in reliance upon the statements
and representations made to Westchester Fire Insurance Company (the “Insurer”)
by Chase Manhattan Automotive Finance Corporation (the “Insured”) in its
Submission (as defined below), and subject to the terms, conditions, exclusions
and limitations contained herein or in any endorsements added hereto, all of
which collectively constitute the “Policy”, the Insurer and the Insured agree
as follows:


 


ARTICLE 1.  TERM


 


This Policy shall be
effective as of 11:59 p.m., Eastern Standard Time, on December 31, 2000
(the “Effective Date”) and shall continue in force until the Final Payment Date
(as defined below) (the “Term”).


 


ARTICLE 2.  PREMIUM AND
ADDITIONAL PREMIUM


 


The premium payable to
the Insurer hereunder (the “Premium”) is $121 million.  The Premium is gross of all taxes and
brokerage commissions.  The Premium is
payable on March 5, 2001 (the “Premium Payment Date”).  In the event Covered Losses exceed $435
million, the Insured will pay to the Insurer, on a funds withheld basis, an
additional premium in the amount of $30 million (the “Additional
Premium”).  The Additional Premium is net
of all taxes and gross of all brokerage commissions.


 


ARTICLE 3.  INSURING
CLAUSE


 


The Insurer will pay 100%
of Covered Losses in excess of the Attachment Point subject to the Limit of
Liability.


 


ARTICLE 4.  PROFIT SHARING


 


In the event Covered
Losses are less than $405 million, the Insurer will pay the Insured a profit
sharing amount equal to the lesser of (i) $125 million or (ii) $405 million
less Covered Losses (the “Profit Sharing Amount”).  The Profit Sharing Amount will be paid in
accordance with Article 7 hereof.


 


ARTICLE 5.  DEFINITIONS


 


The following terms shall
have the respective meanings ascribed to them below.


 
















 


	
  Actual Maturity Date:

  	
   

  	
  With respect to a
  Returned Vehicle, “Actual Maturity Date” means the date the Insured receives
  notification from its authorized agent that it has obtained possession of the
  vehicle on behalf of the Insured. With respect to a Purchase Option Vehicle
  or a Chase Financed Purchase Option Vehicle, “Actual Maturity Date” means the
  date the Insured receives the proceeds from the sale of the vehicle.

  
	
   

  	
   

  	
   

  
	
  Amortized Value:

  	
   

  	
  At any date and
  with respect to a vehicle that is the subject of a Covered Lease, the
  adjusted lease balance specified in the Insured’s LeMans system for such
  vehicle at such date, which amount equals the Initial Adjusted Capitalized
  Cost less depreciation calculated by the Insured on a monthly basis (as
  specified in the Insured’s LeMans system). 
  The parties acknowledge and agree that, with respect to Extended
  Leases, monthly depreciation will be calculated as follows: (i) the Initial
  Adjusted Capitalized Cost of the Potentially Covered Lease minus the amount
  set forth in the Final Data Base with respect to such vehicle under the field
  entitled “Bor-Res-On-Lease” divided by (ii) the original term of the
  Potentially Covered Lease.

  
	
   

  	
   

  	
   

  
	
  Attachment
  Point:

  	
   

  	
  $280 million.

  
	
   

  	
   

  	
   

  
	
  Black Book
  Adjustment

  	
   

  	
   

  
	
  Amount:

  	
   

  	
  The greater of (i) zero
  or (ii) (A) the difference between (x) the sum of the Black Book Values one
  calendar month after the Sales Date for each Returned Vehicle for which a
  Black Book Value is available multiplied by 0.99 and (y) the sum of the Net
  Realized Values for each Returned Vehicle for which a Black Book Value is
  available multiplied by (B) a fraction, the numerator of which is equal to
  the aggregate Book Cost on all Returned Vehicles and the denominator of which
  is equal to the aggregate Book Cost on all Returned Vehicles for which Black
  Book Values are available.

  
	
   

  	
   

  	
   

  
	
  Black Book Value:

  	
   

  	
  With respect to a
  vehicle that is the subject of a Covered Lease, the “average wholesale” value
  established by the Black Book Official Used Car Market Guide, Monthly
  National Edition, for a vehicle of the same make and model as such vehicle,
  without adjustments for options installed by the manufacturer and/or the
  automobile dealer.  In the event that
  Black Book either ceases to exist or no longer publishes a Monthly National
  Edition during the Term, the Insured and Insurer shall mutually agree to
  another recognized nationally published used car market guide.

  
	
   

  	
   

  	
   

  
	
  Book Cost:

  	
   

  	
  With respect to a
  vehicle that is the subject of a Covered Lease that has an Actual Maturity
  Date which occurs on or after the

  



 


2
















 


	
   

  	
   

  	
  Scheduled Maturity
  Date, “Book Cost” means Amortized Value at the Actual Maturity Date.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With respect to a
  vehicle that is the subject of a Covered Lease that has an Actual Maturity
  Date which occurs prior to the Scheduled Maturity Date, “Book Cost” means:
  (i) for a Returned Vehicle, the Amortized Value at the Actual Maturity Date
  less an amount equal to the remaining scheduled lease payments; and (ii) for
  a Purchase Option Vehicle or a Chase Financed Purchase Option Vehicle, the
  Amortized Value at the Actual Maturity Date.

  
	
   

  	
   

  	
   

  
	
  Chase Financed Purchase

  	
   

  	
   

  
	
  Option Vehicle:

  	
   

  	
  A vehicle that
  is purchased from the Insured pursuant to the purchase option provision of
  the related lease contract by either the lessee or a purchaser other than the
  lessee, where the financing for such purchase is provided by the Insured or
  one of its affiliates.  The sale
  transaction may take place at a physical location, via an Internet site,
  and/or via phone, fax and/or mail.

  
	
   

  	
   

  	
   

  
	
  Covered Lease:

  	
   

  	
  Each Potentially
  Covered Lease that has an Actual Maturity Date occurring no earlier than 180
  days prior to the Scheduled Maturity Date for such Potentially Covered Lease
  and no later than 29 days after the Scheduled Maturity Date for such
  Potentially Covered Lease (or, if such Potentially Covered Lease is an
  Extended Lease, no later than 24 months following the Scheduled Maturity Date
  for such Potentially Covered Lease).

  
	
   

  	
   

  	
   

  
	
  Covered Losses:

  	
   

  	
  The greater of (i)
  zero or (ii) (A) the sum of the Book Costs for the Covered Leases less (B)
  the sum of the Net Realized Values for the Covered Leases less (C) the Black
  Book Adjustment Amount less (D) the Sales Expense Adjustment Amount;
  provided, however, that clauses (C) and (D) shall only be considered in the
  calculation of Covered Losses performed as of the Final Payment Date.

  
	
   

  	
   

  	
   

  
	
  Disposition Fee:

  	
   

  	
  With respect to a
  Covered Lease, the disposition fee listed on the lease contract for such
  Covered Lease, whether or not billed or recovered.

  
	
   

  	
   

  	
   

  
	
  Excess Mileage:

  	
   

  	
  With respect to a
  Covered Lease, the billable excess mileage in accordance with the lease
  contract for such Covered Lease, whether or not billed or recovered.

  
	
   

  	
   

  	
   

  
	
  Excess Wear and Tear:

  	
   

  	
  With respect to a
  Covered Lease, the billable excess wear and tear in accordance with the lease
  contract for such Covered Lease, whether or not billed or recovered.

  



 


3
















 


	
  Extended Lease:

  	
   

  	
  A Potentially Covered
  Lease that satisfies the following criteria: 
  (i) the Actual Maturity Date is no less than one Month and no greater
  than 24 Months following the Scheduled Maturity Date and (ii) the lease
  payment during such period remains the same as during the original lease
  period.

  
	
   

  	
   

  	
   

  
	
  Final Data Base:

  	
   

  	
  The electronic
  file provided to the Insurer by the Insured on January 17, 2001 entitled
  “GALUIN.zip”, composed of records for 207,147 leases.

  
	
   

  	
   

  	
   

  
	
  Gross Sales
  Price:

  	
   

  	
  With respect to
  a Returned Vehicle, a Purchase Option Vehicle or a Chase Financed Purchase
  Option Vehicle, “Gross Sales Price” means the purchase price for such
  vehicle.  For purposes of calculating
  the Gross Sales Price, every Returned Vehicle, Purchase Option Vehicle and
  Chase Financed Purchase Option Vehicle shall be sold in a commercially
  reasonable manner appropriate for such form of sale.

  
	
   

  	
   

  	
   

  
	
  Initial Adjusted
  Capitalized

  	
   

  	
   

  
	
  Cost:

  	
   

  	
  With respect to a
  vehicle that is the subject of a Covered Lease, the gross capitalized cost of
  such vehicle less any capitalized cost reduction payments made by or on
  behalf of the lessee, as specified in the Insured’s LeMans system at the
  inception of the Covered Lease.

  
	
   

  	
   

  	
   

  
	
  Insured Losses:

  	
   

  	
  The lesser of (i)
  Covered Losses in excess of the Attachment Point and (ii) the Limit of
  Liability.

  
	
   

  	
   

  	
   

  
	
  Limit of
  Liability:

  	
   

  	
  The Insurer
  shall not pay more than $220 million of Covered Losses.

  
	
   

  	
   

  	
   

  
	
  Month:

  	
   

  	
  Month shall mean a
  30-day month.

  
	
   

  	
   

  	
   

  
	
  Net Realized
  Value:

  	
   

  	
  With respect to
  a Purchase Option Vehicle or a Chase Financed Purchase Option Vehicle, “Net
  Realized Value” means the Gross Sales Price for such vehicle.  With respect to a Returned Vehicle, “Net
  Realized Value” means the Gross Sales Price for such
  vehicle plus Excess Mileage, Excess Wear and Tear and Disposition Fee minus
  Sales Expenses.  With respect to a
  vehicle that has a Sales Date that is more than 90 days after the Actual
  Maturity Date, “Net Realized Value” means the Black Book Value two Months
  after the Actual Maturity Date.

  
	
   

  	
   

  	
   

  
	
  Potentially
  Covered Lease:

  	
   

  	
  Each lease
  transaction included in the Final Data Base that (i) is in force at the
  Effective Date, (ii) has a Scheduled Maturity Date occurring on or after
  January 1, 2001 and (iii) at the Effective Date

  



 


4
















 


	
   

  	
   

  	
  is
  not insured under any other insurance program.  Potentially Covered Lease shall include the
  replacement of a vehicle that is the subject of a lease that is included in
  the Final Data Base, provided that such vehicle is replaced by a vehicle of the
  same make of greater or equal value and the terms of the existing lease as
  listed on the Final Data Base remains in force (a “Collateral
  Substitution”).  The Insured shall
  report any Collateral Substitution to the Insurer within 30 days following
  the end of the calendar month of such occurrence via a method and in a format
  that is mutually agreed to by the Insurer and the Insured.  Potentially Covered Lease shall also
  include the flat cancellation of a lease contract that is the subject of a
  lease transaction included in the Final Data Base and the substitution of
  another lease contract on the same vehicle that is the subject of such lease
  transaction provided that the Residual Value set forth in the new lease
  contract is the same as the Residual Value set forth on the Final Data Base
  for such vehicle (a “Flat Cancelled Lease”). The Insured shall report any
  Flat Cancelled Lease to the Insurer within 30 days following the end of the
  calendar month of such occurrence via a method and in a format that is
  mutually agreed to by the Insurer and the Insured.

  
	
   

  	
   

  	
   

  
	
  Purchase Option
  Vehicle:

  	
   

  	
  A vehicle that
  is purchased from the Insured pursuant to the purchase option provision of
  the related lease contract by either the lessee, a purchaser other than the
  lessee or an automobile dealer. The sale transaction may take place at a
  physical location, via an Internet site and/or via phone, fax and/or mail.

  
	
   

  	
   

  	
   

  
	
  Residual Value:

  	
   

  	
  With respect to
  a vehicle that is the subject of a Covered Lease, the amount set forth in the
  Final Data Base with respect to such vehicle under the field entitled
  “Bor-Res-On-Lease”.

  
	
   

  	
   

  	
   

  
	
  Returned
  Vehicle:

  	
   

  	
  A vehicle that
  is returned to the Insured by the lessee pursuant to the lessee’s exercise of
  the return option under the lease contract. The Insured may subsequently sell
  such vehicle at an auction that has bidding or fixed priced sales, or may
  sell such vehicle to a purchaser other than the lessee, dealer, or employee
  of the Insured.  The sale may take
  place at a physical location, via an Internet site and/or via phone, mail
  and/or fax.

  
	
   

  	
   

  	
   

  
	
  Sales Date:

  	
   

  	
  The date the
  Insured reports the sale of a vehicle that is the subject of a Covered Lease
  on the Insured’s LeMans system.

  
	
   

  	
   

  	
   

  
	
  Sales Expense
  Adjustment

  	
   

  	
   

  
	
  Amount:

  	
   

  	
  An amount equal
  to the greater of (i) zero or (ii) “A” minus “B” minus “C”, where

  



 


5
















 


	
   

  	
   

  	
  “A” equals the
  sum of the Sales Expenses for all Returned Vehicles

  
	
   

  	
   

  	
  “B” equals the
  sum of all Disposition Fees for all Returned Vehicles, and

  
	
   

  	
   

  	
  “C” equals $330
  multiplied by the total number of all Returned Vehicles.

  
	
   

  	
   

  	
   

  
	
  Sales Expenses:

  	
   

  	
  Auction and
  other third party expenses actually incurred by or on behalf of the Insured
  that are (i) directly related to the sale of a Returned Vehicle and (ii)
  either (A) reasonably classifiable as one of the following categories of
  expenses: reconditioning expenses, transportation expenses, auction expenses
  and appraisal fees or (B) expenses directly related to the sale of a Returned
  Vehicle via the Internet.

  
	
   

  	
   

  	
   

  
	
  Scheduled Maturity
  Date:

  	
   

  	
  With respect to a
  Potentially Covered Lease, the date specified with respect to such
  Potentially Covered Lease in the Final Data Base under the fields entitled
  “BOR-LSE-MAT-CCYY, BOR-LSE-MAT-MM, BOR-LSE-MAT-DD”.

  
	
   

  	
   

  	
   

  
	
  Submission:

  	
   

  	
  The following electronic files provided by the
  Insured to the Insurer either directly or through Leadenhall Insurance
  Brokers:  “GALUIN”; “ChaseEWT”;
  “chasefees2”; “ScheduledMaturityEF”; and “ScheduledMaturity1231”.

  



 


ARTICLE 6.  ACCOUNTS AND
REPORTS


 


Within 30 calendar days
following the end of each calendar month during the Term, the Insured will
provide the Insurer with an electronic report containing the information set
forth in Exhibit A attached hereto (the “Monthly Loss Account”).


 


Within 30 days following
the end of each calendar quarter during the Term, the Insured will provide the
Insurer with an electronic report containing the information set forth in
Exhibit B attached hereto.


 


The Insurer acknowledges
that the Insured will not be able to comply with the reporting requirements set
forth in this Article 6 or the reporting requirements with respect to any
Flat Cancelled Leases or Collateral Substitutions for a period of time after
the Effective Date, and that such failure to comply shall not be deemed a
breach of the Insured’s obligations under this Policy.  The Insured will use commercially reasonable
efforts to develop the reports required by this Article 6 within 120 days
after the Premium Payment Date.  Upon the
Insured’s successful development of the reports necessary to comply with this
Article 6, the Insured will provide such reports to the Insurer
retroactive to January 1, 2001 as well as information with respect to any
Flat Cancelled Leases and Collateral Substitutions that have occurred since
January 1, 2001.


 


6
















 


ARTICLE 7.   SETTLEMENTS


 


Any payment in respect of
the Profit Sharing Amount shall be due on the later to occur of (i) the date
that is 60 days following the last Scheduled Maturity Date to occur and (ii)
the date that is five years and 60 days following the Premium Payment Date
(such later date to occur is referred to as the “Profit Sharing Payment Date”).


 


Insured Losses shall be
paid on a funds withheld basis with final settlement to be made on the latest
to occur of (i) the date that is 60 days following the last Scheduled Maturity
Date to occur, (ii) the date that is 60 days following the last revised
scheduled maturity date to occur with respect to an Extended Lease and (iii)
the date that is five years and 60 days following the Premium Payment Date
(such latest date to occur is referred to as the “Final Payment Date”).  Notwithstanding the preceding sentence, in
the event Insured Losses exceed $155 million, the Insurer will make provisional
payments to the Insured in respect of Insured Losses in excess of $155 million
on a quarterly basis within 10 days following receipt of the Monthly Loss
Account for the last month of each calendar quarter; provided, however, that
the Insurer shall offset Insured Losses in excess of $155 million but less than
$185 million against the Additional Premium on a dollar for dollar basis, and
the amounts so offset (collectively, the “Offset Amount”) shall not be
considered provisional payments hereunder. 
On the Final Payment Date, the Insurer shall calculate Insured
Losses.  In the event the aggregate
provisional payments actually paid to the Insured by the Insurer in respect of
Insured Losses are in excess of the Insured Losses less the Offset Amount (if
any), the Insured shall refund to the Insurer on the Final Payment Date an
amount equal to such excess.  In the
event the Insured Losses less the Offset Amount (if any) are in excess of the
aggregate provisional payments actually paid to the Insured by the Insurer in
respect of Insured Losses, the Insurer shall pay to the Insured on the Final
Payment Date an amount equal to such excess. 
In addition and notwithstanding anything to the contrary contained in
Article 2 hereof, in the event Insured Losses are greater than $155
million but less than $185 million, the Insured shall be entitled to retain the
portion of the Additional Premium not offset by Insured Losses.


 


Notwithstanding anything
to the contrary contained herein, in the event a Profit Sharing Amount is paid
and the Profit Sharing Payment Date precedes the Final Payment Date, the
Insurer shall be entitled to reduce Insured Losses payable on the Final Payment
Date (if any) by an amount equal to the lesser of the Profit Sharing Amount
paid to the Insured and the amount of Insured Losses reported subsequent to the
Profit Sharing Payment Date. 
Notwithstanding anything to the contrary contained herein, in the event
the Profit Sharing Payment Date precedes the Final Payment Date and Covered
Losses at the Final Payment Date are less than Covered Losses at the Profit
Sharing Payment Date, on the Final Payment Date the Insurer will recalculate
the Profit Sharing Amount based on Covered Losses at the Final Payment Date
and, if the Profit Sharing Amount as so recalculated exceeds the Profit Sharing
Amount paid on the Profit Sharing Payment Date, the Insurer will pay to the
Insured on the Final Payment Date an amount equal to such excess.


 


7
















 


ARTICLE 8.  ACCESS TO
RECORDS


 


The Insurer and its
authorized representatives shall have access to the books and records of the
Insured (including, without limitation, all electronic data) upon prior
reasonable notice and during normal business hours for the sole purpose of
obtaining information concerning this Policy or its subject matter and the
right to make copies thereof (at its own expense), subject to applicable laws,
rules and regulations, including, without limitation, applicable federal or
state privacy laws.  For the avoidance of
doubt, the Insurer’s reinsurers and retrocessionaires with respect to this
Policy (if any) shall be considered authorized representatives of the Insurer
when accompanying the Insurer on visits to the Insured for the purposes stated
above in this Article.


 


ARTICLE  9. 
REPRESENTATIONS AND COVENANTS OF THE INSURED


 


The Submission was accurate in all material respects as of the date of
delivery.


 


In consideration
of the coverage provided to it under this Policy, the Insured covenants to the
Insurer as follows:


 


During the Term,
the Insured shall not sell, transfer or assign all or substantially all of the
Potentially Covered Leases to other than its affiliates without the written
consent of the Insurer, which consent shall not be unreasonably withheld.  For the avoidance of doubt, this covenant
relates to sale, transfer and assignment of leases, not to sale, transfer or
assignment of vehicles.  For the further
avoidance of doubt, this covenant does not apply to dealer lease and/or vehicle
repurchases in connection with breaches under Chase dealer agreements.  The Insured will provide prompt written
notice to the Insurer of any sale, transfer or assignment of all or
substantially all the Potentially Covered Leases to any affiliate.


 


During the Term,
the interest rate charged on Chase Financed Purchase Option Vehicles will be
based on the same return on equity and profitability models that Chase
establishes for its used vehicle loans made directly to consumers.


 


During the Term,
the Insured shall maintain a dealer asset remarketing effort and a consumer
asset remarketing effort with respect to Purchase Option Vehicles and Chase
Financed Purchase Option Vehicles, and the Insured’s remarketing practices with
respect to such efforts shall conform to or exceed standard industry practices,
subject, however, to the Insured’s compliance with the terms and conditions of
this Policy.


 


The Insured shall
not change its current methodology or practices with respect to its LeMans
system as it relates to the determination of Initial Adjusted Capitalized Cost,  Amortized Value,
Book Cost or depreciation.


 


ARTICLE 10.  COVENANTS OF THE INSURER


 


The Insurer shall issue an endorsement to this Policy (the “Liability
Endorsement”) increasing the Limit of Liability by $200 million (the
“Additional Limit”) (resulting in a revised Limit of Liability of $420 million)
in the event Leadenhall Insurance Brokers (i)


 


8
















 


place reinsurance coverage that is reasonably acceptable to the Insurer
on the entire Additional Limit by April 30, 2001 with reinsurers rated at
least A IX by AM Best and (ii) procure reinsurance cut-through endorsements in
the form of Annex I hereto from such reinsurers for the entire Additional Limit
(in the aggregate).  In the event the
Liability Endorsement is not issued by April 30, 2001 or such later date
as the Insured and the Insurer shall agree to in writing, the Insurer promptly
shall refund $6 million of Premium to the Insured with interest from the
Premium Payment Date to the date of refund at an annual rate equal to 5.5%.


 


ARTICLE 11.  GENERAL PROVISIONS


 


1.                                       Offset.  The Insured and the Insurer have the right to
offset any balance(s) due from one to the other hereunder.


 


2.                                       Governing
Law.  This Policy shall be governed
by and interpreted in accordance with the laws of the State of New York,
without regard to its conflict of law principles.


 


3.                                       Assignment.  This Policy shall be binding upon and inure
to the benefit of the Insurer and the Insured and their respective successors
and assigns.  This Policy may not be
assigned by either party (other than by the Insured to an affiliate of the
Insured or by the Insurer to an affiliate of the Insurer that has an AM Best
rating of at least A IX at the time of assignment) without the prior written
consent of the other party; provided, if
the AM Best rating of the Insurer falls below A IX during the Term, the Insurer
shall use best efforts to promptly substitute for the Insurer another company
within the ACE Group of Companies whose AM Best rating is equal to or better
than A IX (for the avoidance of doubt, such substitution will be in respect of
the Insurer’s gross exposure under this Policy, including, without limitation,
exposure in respect of the Profit Sharing Amount); provided, further if
such assignment is impractical to effect because of tax, regulatory or
accounting issues, the Insurer will reinsure its gross exposure under this
Policy (including, without limitation,
exposure in respect of the Profit Sharing Amount) to a member of the ACE
Group of Companies that has an AM Best rating equal to or better than A IX or a
Standard & Poor’s rating in the AA category or better and procure a
reinsurance cut-through endorsement in the form of Annex I hereto from such
reinsurer in favor of the Insured.  In the event a substitution of insurers is
made in accordance with the second sentence of this Section 3 and during
the Term the AM Best rating of the company substituted for the Insurer falls
below A IX, the substituted company shall be obligated to comply with the second
sentence of this Section 3.  In the
event reinsurance and a reinsurance cut-through endorsement is effected in
accordance with the second sentence of this Section 3 and the AM Best
rating or Standard & Poor’s rating of the company providing the reinsurance
and the reinsurance endorsement falls below A IX or the AA category,
respectively, the Insurer shall be obligated to comply once again with the
second sentence of this Section 3.  The
Insurer recognizes that the Insurer’s compliance with this Section 3 is of
a special, unique and extraordinary character, which gives it peculiar value,
the loss of which may not be reasonably or adequately compensated in damages in
any action at law, and that a breach by the Insurer of


 


9
















 


the provisions of this
Section 3 may cause the Insured irreparable injury and damage.  The Insurer agrees that the Insured shall be
entitled to the remedies of specific performance and other equitable relief to
prevent a breach of this Section 3 by the Insurer without the necessity of
proving damages and that the Insured shall not be required to post bond or any
other form of guarantee as a condition of such relief.  This previous sentence shall not, however, be
construed as a waiver of any rights which the Insured may have for damages or
otherwise, nor shall it limit in any way any other remedies which may result
from the breach of this Policy.


 


4.                                       Amendment.  No amendment or modification of this Policy
shall be effective except when made by a written endorsement to this Policy
that is agreed to in writing by the Insured and signed by an authorized
representative of the Insurer.


 


5.                                       Headings.  The headings used in this Policy are intended
and inserted solely for convenience of reference and shall not effect the meaning, interpretation, construction or effect
of this Policy.


 


6.                                       Entire
Agreement. This Policy constitutes the entire agreement between the parties
with respect to the contents of this Policy, and supersedes all prior
agreements, understandings and negotiations, oral and written, with respect
hereto.


 


7.                                       Waiver.  No waiver of this Policy shall be effective
unless in writing and signed by a duly authorized officer of the party granting
the waiver.  The failure of a party to
enforce any provision of this Policy shall not constitute a waiver by such
party of such provision.  The past waiver
of a provision by a party shall not constitute a course of conduct or waiver in
the future of that same provision.


 


8.                                       Taxes
and Brokerage.  Except as provided in
the following sentence, any taxes and brokerage payable with respect to this
Policy shall be borne by the Insurer and shall be paid directly by the Insurer
to the applicable taxing authorities. 
Any taxes payable with respect to the Additional Premium shall be
payable by the Insured to the Insurer, and the Insurer shall pay such taxes to
the applicable taxing authorities.


 


9.                                       Cancellation.  This Policy may be canceled by
the Insurer for non-payment of the Premium, but shall not be cancelable for any
other reason by either party.


 


10.                                 Loss
Payee.  The following entity is named
as loss payee under this Policy: Chase Vehicle Exchange, Inc., P.O. Box 5230, New Hyde Park, New York, 11742.


 


11.                                 No
Reliance.  The Insured has reviewed
the terms, conditions and significance of this Policy with its legal counsel,
tax counsel and accountants and is accepting this Policy with full knowledge of
its terms, conditions and significance. 
In accepting this Policy, the Insured is not relying upon any
representation or warranty by the Insurer regarding the legal, tax or
accounting implications for the Insured in purchasing the insurance provided by
this Policy.  It is understood and


 


10
















 


agreed
that this Policy is a manuscript policy that has been negotiated at arm’s
length and on equal footing as between the Insured and Insurer, and that both
parties fully understood and agreed to all the terms and conditions contained
in this Policy.


 


12.                                 Consent
to Jurisdiction; Service of Suit.  It
is agreed that, in the event of failure of the Insurer to pay any amount
claimed to be due hereunder, the Insurer, at the request of the Insured, will
submit to the jurisdiction of a court of competent jurisdiction within the
United States.  Nothing in this condition
constitutes or should be understood to constitute a waiver of the Insurer’s
right to commence an action in any court of competent jurisdiction in the
United States, to remove an action to a United States District Court or to seek
a transfer of a case to another court as permitted by the laws of the United
States or of any state in the United States. 
It is further agreed that service of process in such suit may be made
upon Counsel, Legal Department, Westchester Fire Insurance Company, or his or
her representative, and that in any suit instituted against the Insurer upon
this Policy, the Insurer will abide by the final decision of such court or of
any appellate court in the event of any appeal.


 


13.                                 Waiver
of Jury Trial. THE INSURED AND THE
INSURER EACH IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS POLICY AND ACKNOWLEDGES
THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO THE ISSUANCE AND ACCEPTANCE OF THIS
POLICY.


 


14.                                 Currency.  Whenever the word “Dollars” or the “$” sign
appear in this Policy, they shall be construed to mean United States Dollars,
and all payments made hereunder shall be made in United States Dollars.


 


15.                                 Notices.  All notices under any provision of this
Policy shall be in writing and given by a nationally recognized overnight
courier service or certified mail properly addressed to the appropriate
party.  Notices shall be sent to the
Insurer and the Insured at the addresses listed in the Declarations (attention:
General Counsel, in the case of notices sent to the Insurer, and attention:
Jeffrey Levine, in the case of notices sent to the Insured).  Notices sent by courier shall be deemed
received and effective one day after such notice is sent.  Notices sent by certified mail shall be
deemed received and effective three days after such notice is sent.


 


11
















 


Exhibit A


 


Monthly Loss Account


 


Number of Vehicles
in each Status Type at month end


Covered Losses
from Effective Date to month end


Aggregate Residual
Value by Status Type and in total


 


The above
information will be summarized by Scheduled Maturity Dates falling within a
calendar month and Status Type (i.e., Active, Not Covered, Returned Vehicle,
Purchase Option Vehicle, Chase Financed Purchase
Option Vehicle).


 


12
















 


Exhibit B


 


An electronic file
that includes the following record data for each Potentially Covered Lease:


 


	
  1.

  	
  Vehicle Make

  
	
  2.

  	
  Vehicle Model

  
	
  3.

  	
  Vehicle Year

  
	
  4.

  	
  Number of Months
  that Lease was Extended, if any

  
	
  5.

  	
  Lease Start Date

  
	
  6.

  	
  Scheduled
  Maturity Date

  
	
  7.

  	
  Actual Maturity
  Date

  
	
  8.

  	
  Lease Term

  
	
  9.

  	
  Sales Date

  
	
  10.

  	
  Residual Value
  disclosed on the Final Date Base

  
	
  11.

  	
  Amortized Value

  
	
  12.

  	
  Monthly Lease
  Payment

  
	
  13.

  	
  Money Factor

  
	
  14.

  	
  Status (Active,
  Not Covered, Returned Vehicle, Purchase Option Vehicle, Chase Financed
  Purchase Option Vehicle)

  
	
  15.

  	
  Gross Sales
  Price

  
	
  16.

  	
  For Returned
  Vehicles only, total Sales Expenses

  
	
  17.

  	
  For Returned
  Vehicles only, 99% of Black Book Value using Sales Date plus One Month

  
	
  18.

  	
  For Returned
  Vehicles only, Allowable Mileage

  
	
  19.

  	
  For Returned
  Vehicles only, the lease contract charge per excess mile

  
	
  20.

  	
  For Returned
  Vehicles only, mileage at the return date

  
	
  21.

  	
  For Returned
  Vehicles only, the billable Excess Mileage charge

  
	
  22.

  	
  For Returned
  Vehicles only, the billable Excess Wear and Tear charge

  
	
  23.

  	
  Net Realized
  Value

  
	
  24.

  	
  Covered Loss

  
	
  25.

  	
  Adjusted MSRP as
  listed in the Insured’s LeMans system

  
	
  26.

  	
  ALG projected
  estimate, if available

  



 


13
















 


Annex I


 


CUT-THROUGH
ENDORSEMENT


 


This Cut-Through
Endorsement is an endorsement to and forms a part of the reinsurance agreement
(the “Reinsurance Agreement”) dated as of [ 
] entered into by and between Westchester Fire Insurance Company (the
“Company”) and [insert name of reinsurer] (the “Reinsurer”) pursuant to which
the Reinsurer has reinsured the Company with respect to the Company’s liability
under a Residual Value Insurance Policy issued by the Company to Chase
Manhattan Automotive Finance Corporation (the “Insured”) with an effective date
of December 31, 2000 (the “Policy”).


 


For value
received, the Reinsurer hereby agrees that, in the event of the occurrence of
the insolvency, receivership, liquidation or reorganization of the Company and
the failure of the Company to pay any amounts payable to the Insured under the
Policy within the time provided in the Policy, (i) the Reinsurer will
immediately become liable to the Insured for the portion of such amount that is
covered under the Reinsurance Agreement (the “Covered Amount”), (ii) the
Reinsurer will have the right and the obligation to make direct payment of the
Covered Amount to the Insured within three business days of receipt by the
Reinsurer of a notice in the form attached hereto as Exhibit A and (iii) the
Insured will have a direct right of action against the Reinsurer for the
payment of the Covered Amount, in each case without diminution because of the
occurrence of any proceeding or circumstance involving the Company, including
the occurrence of the insolvency, receivership, liquidation or reorganization
of the Company, and notwithstanding any payment by the Reinsurer to the Company
or the rejection, disaffirmation, reformation or other action terminating or
modifying the Policy or the Reinsurance Agreement by any liquidator,
rehabilitator, conservator or receiver of the Company or other officer with
similar powers with respect to the Company or by operation of law.  The direct payment of any Covered Amount by
the Reinsurer to the Insured pursuant to this Endorsement will extinguish any
obligation on the part of the Reinsurer under the Reinsurance Agreement or
otherwise to make any other payment in respect of such Covered Amount.


 


This Endorsement does not cover amounts the Insurer disputes in good
faith are owed under the Policy until such time as such dispute has been fully
and finally resolved.


 


The undersigned covenant
that, while the Policy is in force, without the prior written consent of the
Insured, the Reinsurance Agreement shall not be (i) assigned, (ii) terminated
or (iii) altered or modified in any manner adverse to the interests of the
Insured.  The undersigned further
covenant that this Endorsement shall not be altered,
modified or terminated while the Policy is in force without the prior written
consent of the Insured.


 


Promptly following the
execution of this Endorsement, the Company shall deliver to the Insured a copy
of the executed Endorsement.  The Insured
shall be a third party beneficiary of the Reinsurance Agreement for purposes of
enforcing this Endorsement.


 


Nothing herein contained
shall be held to vary, alter, waive or extend any of the terms, conditions,
provisions, agreements or limitations of the Reinsurance Agreement other than
as above stated.  In the event of any
conflict between the provisions of this Endorsement and the Reinsurance
Agreement, the provisions of this Endorsement shall govern.


 


14
















 


IN WITNESS WHEREOF, the
Company and the Reinsurer have each caused this Endorsement to be signed by
duly authorized officers as of the date first above written.


 


 


	
  WESTCHESTER FIRE
  INSURANCE COMPANY

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  
	
   

  
	
  [REINSURER]

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


15
















 


EXHIBIT A


NOTICE OF CLAIM


 


[insert
date]


[insert
name and address of Reinsurer]


 


Re:
 Cut-Through Endorsement to the Reinsurance Agreement between Westchester
Fire Insurance Company (the “Company”) and [insert name of reinsurer] (the
“Reinsurer”) dated as of [insert date] in respect of the Residual Value
Insurance Policy issued by the Company to Chase Manhattan Automotive Finance
Corporation (the “Insured”) with an effective date of December 31, 2000
(the “Policy”).


 


The undersigned, a
duly authorized officer of the Insured, hereby certifies to the Reinsurer, with
reference to the Policy, that:


 


1.               The Insured has
submitted a claim to the Company in accordance with the terms and provisions of
the Policy.


 


2.               The Insurer is
obligated to and has failed to pay all or a portion of such claim within the
time and in accordance with the provisions of the Policy by reason of the
occurrence of the insolvency, receivership, liquidation or reorganization of
the Company.


 


3.               The amount of such
claim remaining unpaid as of the date of this notice is
$                    
(the “Covered Amount”);


 


4.               Attached hereto is
a copy of the claim notice to sent to the Company and
the report or other document on the basis of which the Insured has made the
calculation necessary to determine the claim amount under the Policy.


 


5.               The Covered Amount
is not the subject of dispute between the Company and the Insured.


 


6.               The Insured hereby
assigns to the Reinsurer its right to receive from the Company an amount equal
to the Covered Amount, and the Reinsurer shall be subrogated to the rights of
the Insured under the Policy in relation to such amount.  The Insured shall execute all powers of
attorney, consents and other instruments necessary to effectuate such
assignment.


 


7.               Payment of the
Covered Amount should be made by wire transfer directed to:


 


If you fail to
make full payment of amounts due and payable and claimed hereby, the above
instrument of assignment shall be without effect and shall be cancelled and returned, on the date such payment is due, by you to the
Insured.


 


IN WITNESS
WHEREOF, the Insured has executed and delivered this Notice of Claim to the
Reinsurer as of the       day of
                           ,
           .


 


CHASE MANHATTAN
AUTOMOTIVE FINANCE CORPORATION


 


	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


16
















 


SCHEDULE 1


 


	
  Cusip

  	
   

  	
  Par Value/

  Current Face

  	
   

  	
  Name

  	
   

  	
  Maturity

  	
   

  	
  Coupon

  	
   

  	
  Book Price

  	
   

  	
  Book Value

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  143658AG7

  	
   

  	
  2,500,000.00

  	
   

  	
  CARNIVAL CORP

  	
   

  	
  5/15/2005

  	
   

  	
  7.050

  	
   

  	
  100.720

  	
   

  	
  2,517,988

  
	
  25156PAA1

  	
   

  	
  3,000,000.00

  	
   

  	
  DEUTSCHE TEL FIN

  	
   

  	
  6/15/2005

  	
   

  	
  8.250

  	
   

  	
  100.899

  	
   

  	
  3,026,962

  
	
  205363AC8

  	
   

  	
  3,000,000.00

  	
   

  	
  COMPUTER SCIENCE

  	
   

  	
  8/8/2005

  	
   

  	
  7.500

  	
   

  	
  101.496

  	
   

  	
  3,044,874

  
	
  879385AB8

  	
   

  	
  1,350,000.00

  	
   

  	
  TELEFONICA EUROP

  	
   

  	
  9/15/2005

  	
   

  	
  7.350

  	
   

  	
  101.205

  	
   

  	
  1,366,267

  
	
  3704248B2

  	
   

  	
  3,000,000.00

  	
   

  	
  GMAC

  	
   

  	
  10/15/2005

  	
   

  	
  6.625

  	
   

  	
  100.125

  	
   

  	
  3,003,757

  
	
  29452PAA4

  	
   

  	
  1,500,000.00

  	
   

  	
  EQUITABLE LIFE

  	
   

  	
  12/1/2005

  	
   

  	
  6.950

  	
   

  	
  101.374

  	
   

  	
  1,520,607

  
	
  373334FB2

  	
   

  	
  3,050,000.00

  	
   

  	
  GEORGIA POWER

  	
   

  	
  12/1/2005

  	
   

  	
  5.500

  	
   

  	
  98.947

  	
   

  	
  3,017,885

  
	
  718154CA3

  	
   

  	
  2,000,000.00

  	
   

  	
  PHILIP MORRIS

  	
   

  	
  2/1/2006

  	
   

  	
  6.375

  	
   

  	
  99.987

  	
   

  	
  1,999,731

  
	
  125577AM8

  	
   

  	
  2,750,000.00

  	
   

  	
  CIT GROUP INC

  	
   

  	
  2/7/2006

  	
   

  	
  6.500

  	
   

  	
  100.126

  	
   

  	
  2,753,456

  
	
  423328BS1

  	
   

  	
  1,500,000.00

  	
   

  	
  HELLER FINANCIAL

  	
   

  	
  3/15/2006

  	
   

  	
  6.375

  	
   

  	
  99.920

  	
   

  	
  1,498,806

  
	
  066365BY2

  	
   

  	
  3,000,000.00

  	
   

  	
  BANKERS TRUST NY

  	
   

  	
  3/15/2006

  	
   

  	
  7.125

  	
   

  	
  101.480

  	
   

  	
  3,044,389

  
	
  802813AF2

  	
   

  	
  2,520,000.00

  	
   

  	
  SANTANDER FIN IS

  	
   

  	
  4/1/2006

  	
   

  	
  7.000

  	
   

  	
  101.214

  	
   

  	
  2,550,603

  
	
  338915AG6

  	
   

  	
  1,230,000.00

  	
   

  	
  FLEET FINL GROUP

  	
   

  	
  4/15/2006

  	
   

  	
  7.125

  	
   

  	
  105.029

  	
   

  	
  1,291,854

  
	
  939333AB6

  	
   

  	
  200,000.00

  	
   

  	
  WASHINGTON MUTUAL

  	
   

  	
  5/15/2006

  	
   

  	
  6.250

  	
   

  	
  108.369

  	
   

  	
  216,738

  
	
  12634KAF1

  	
   

  	
  3,000,000.00

  	
   

  	
  CS FIRST BOS INC

  	
   

  	
  5/15/2006

  	
   

  	
  7.750

  	
   

  	
  105.259

  	
   

  	
  3,157,772

  
	
  718154CB1

  	
   

  	
  785,000.00

  	
   

  	
  PHILIP MORRIS

  	
   

  	
  6/1/2006

  	
   

  	
  6.950

  	
   

  	
  100.933

  	
   

  	
  792,326

  
	
  337358BG9

  	
   

  	
  2,500,000.00

  	
   

  	
  FIRST UNION CORP

  	
   

  	
  7/15/2006

  	
   

  	
  7.500

  	
   

  	
  111.804

  	
   

  	
  2,795,100

  
	
  06423AAD5

  	
   

  	
  3,000,000.00

  	
   

  	
  BANK ONE CORP

  	
   

  	
  8/1/2006

  	
   

  	
  6.875

  	
   

  	
  101.578

  	
   

  	
  3,047,326

  
	
  302570AK2

  	
   

  	
  3,000,000.00

  	
   

  	
  FPL GROUP CAP

  	
   

  	
  9/15/2006

  	
   

  	
  7.625

  	
   

  	
  103.232

  	
   

  	
  3,096,949

  
	
  638585AT6

  	
   

  	
  3,000,000.00

  	
   

  	
  NATIONSBANK CORP

  	
   

  	
  9/15/2006

  	
   

  	
  7.500

  	
   

  	
  102.791

  	
   

  	
  3,083,735

  
	
  110122AF5

  	
   

  	
  2,000,000.00

  	
   

  	
  BRISTOL-MYER SQB

  	
   

  	
  10/1/2006

  	
   

  	
  4.750

  	
   

  	
  105.911

  	
   

  	
  2,118,220

  
	
  073902AY4

  	
   

  	
  3,000,000.00

  	
   

  	
  BEAR STEARNS CO

  	
   

  	
  10/15/2006

  	
   

  	
  7.250

  	
   

  	
  101.997

  	
   

  	
  3,059,921

  
	
  38142EBR8

  	
   

  	
  1,125,000.00

  	
   

  	
  GOLDMAN SACHS GP

  	
   

  	
  11/1/2006

  	
   

  	
  7.200

  	
   

  	
  102.323

  	
   

  	
  1,151,139

  
	
  524909AX6

  	
   

  	
  3,000,000.00

  	
   

  	
  LEHMAN BROS INC

  	
   

  	
  1/15/2007

  	
   

  	
  7.375

  	
   

  	
  101.987

  	
   

  	
  3,059,608

  
	
  40428HAA0

  	
   

  	
  1,000,000.00

  	
   

  	
  HSBC USA INC

  	
   

  	
  2/15/2007

  	
   

  	
  8.375

  	
   

  	
  104.711

  	
   

  	
  1,047,109

  
	
  3454024U2

  	
   

  	
  3,000,000.00

  	
   

  	
  FORD MOTOR CRED

  	
   

  	
  2/15/2007

  	
   

  	
  7.750

  	
   

  	
  102.631

  	
   

  	
  3,078,919

  
	
  459745EY7

  	
   

  	
  3,250,000.00

  	
   

  	
  INTL LEASE FIN

  	
   

  	
  2/15/2007

  	
   

  	
  5.750

  	
   

  	
  99.713

  	
   

  	
  3,240,681

  
	
  38142ECC0

  	
   

  	
  1,875,000.00

  	
   

  	
  GOLDMAN SACHS GP

  	
   

  	
  3/1/2007

  	
   

  	
  7.200

  	
   

  	
  102.233

  	
   

  	
  1,916,873

  
	
  441812GK4

  	
   

  	
  3,000,000.00

  	
   

  	
  HOUSEHOLD FIN CO

  	
   

  	
  3/1/2007

  	
   

  	
  7.875

  	
   

  	
  103.998

  	
   

  	
  3,119,934

  
	
  637432CS2

  	
   

  	
  3,000,000.00

  	
   

  	
  NATL RURAL UTIL

  	
   

  	
  3/1/2007

  	
   

  	
  6.500

  	
   

  	
  100.337

  	
   

  	
  3,010,098

  
	
  438506AR8

  	
   

  	
  1,500,000.00

  	
   

  	
  HONEYWELL INC

  	
   

  	
  3/15/2007

  	
   

  	
  7.000

  	
   

  	
  107.039

  	
   

  	
  1,605,585

  
	
  362311AK8

  	
   

  	
  3,000,000.00

  	
   

  	
  GTE CALIFORNIA

  	
   

  	
  3/15/2007

  	
   

  	
  7.650

  	
   

  	
  103.497

  	
   

  	
  3,104,913

  
	
  61910DCM2

  	
   

  	
  2,078,842.03

  	
   

  	
  MCF 97MC1 A3

  	
   

  	
  3/20/2007

  	
   

  	
  7.288

  	
   

  	
  101.914

  	
   

  	
  2,118,638

  
	
  79549BCH8

  	
   

  	
  3,000,000.00

  	
   

  	
  SALOMON SB HLDGS

  	
   

  	
  5/15/2007

  	
   

  	
  7.375

  	
   

  	
  102.894

  	
   

  	
  3,086,816

  
	
  201728CG5

  	
   

  	
  3,000,000.00

  	
   

  	
  CMAC 97M1 A3

  	
   

  	
  10/15/2007

  	
   

  	
  6.570

  	
   

  	
  100.784

  	
   

  	
  3,023,524

  
	
  209111CV3

  	
   

  	
  800,000.00

  	
   

  	
  CON EDISON

  	
   

  	
  12/1/2007

  	
   

  	
  6.450

  	
   

  	
  99.221

  	
   

  	
  793,770

  
	
  209111CX9

  	
   

  	
  1,500,000.00

  	
   

  	
  CON EDISON

  	
   

  	
  2/1/2008

  	
   

  	
  6.250

  	
   

  	
  102.280

  	
   

  	
  1,534,193

  
	
  06606H8D2

  	
   

  	
  1,770,000.00

  	
   

  	
  BANKBOSTON NA

  	
   

  	
  3/25/2008

  	
   

  	
  6.375

  	
   

  	
  104.637

  	
   

  	
  1,852,069

  
	
  07383FFP8

  	
   

  	
  4,500,000.00

  	
   

  	
  BSCMS 2001-TOP2 A2

  	
   

  	
  4/15/2011

  	
   

  	
  6.480

  	
   

  	
  105.088

  	
   

  	
  4,728,944

  
	
  31393RQW3

  	
   

  	
  1,567,054.08

  	
   

  	
  FHLMC 2630 KU

  	
   

  	
  6/15/2018

  	
   

  	
  4.500

  	
   

  	
  100.472

  	
   

  	
  1,574,454

  
	
  31393JCD8

  	
   

  	
  2,250,000.00

  	
   

  	
  FHLMC 2551 TB

  	
   

  	
  9/15/2021

  	
   

  	
  4.500

  	
   

  	
  101.883

  	
   

  	
  2,292,372

  
	
  31393H5N8

  	
   

  	
  3,000,000.00

  	
   

  	
  FHLMC 2543 QC

  	
   

  	
  4/15/2026

  	
   

  	
  5.500

  	
   

  	
  102.333

  	
   

  	
  3,069,987

  
	
  06050HNC8

  	
   

  	
  1,959,484.66

  	
   

  	
  BOAMS 2002-6 1B1

  	
   

  	
  7/25/2032

  	
   

  	
  6.500

  	
   

  	
  100.139

  	
   

  	
  1,962,205

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  102,377,094